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No one wants to have a court claim issued against them or their company. Being a defendant means there is a risk of judgment being obtained against you, not to mention the stress it can cause and the resources and management time that will need to be allocated to deal with it. If it does happen, you must act quickly to protect your interests or you risk a judgment being entered against you and registered against your credit profile.
How are legal proceedings started?
Civil legal proceedings are commenced in England and Wales by the issue of a claim form and service of it on the defendant(s). The claim form is usually accompanied or later followed by details of the claim, known as particulars of claim. It is crucial for defendants to act quickly when in receipt of a claim form; delay in dealing with a claim can mean a judgment being entered against them for failing to respond within the required timeframe. It is good practice to ensure arrangements are made for claim forms to be quickly identified on receipt and escalated to an appropriate decision maker internally as soon as possible.
What does a claim form contain?
A claim form should:
- correctly identify the names of each party (persons or entities) in the proceedings;
- briefly but clearly explain the nature of the claimant’s claim and on what legal basis that claim is being made;
- contain an estimate of the claim’s financial value or what other legal remedy is sought;
- be endorsed by a court seal (stamp) to confirm it has been issued and show the date the claim was issued by the relevant Court (indicated by a court seal with the date of issue, which is important for calculating deadlines);
- contain a more detailed particulars of claim on the back of the claim form or in a separate document. This should either be provided at the same time the claim form is served on the recipient or within 14 days of service. In addition, both the claim form and the particulars of claim have to be served no later than 4 months after the date the claim form was issued;
- contain contact details for the claimant (their solicitor’s details if they are legally represented); and
- contain the court’s claim number for the claim (which must be used on all subsequent court documents and correspondence).
Steps to be taken when served with a claim form
Upon receipt of a claim form, defendants must act quickly and efficiently. The clock for responding to the claim and avoiding a “Judgment in Default” being entered against the defendant starts running from the date of service, which has to be calculated in accordance with Court rules.
You may consider the claim to be spurious; you may feel it has been issued prematurely; you may not have been aware there was a dispute; you may feel aggrieved or frustrated; you may be concerned about the prospect of having to incur costs or management time to deal with it.
We’d recommend considering the matters outlined below upon receipt of a claim:
- Are you insured? – Do you have insurance that relates to the claim itself and/or legal expenses insurance that will cover your costs of dealing with it? Insurers will normally allow you to instruct a law firm to acknowledge service (item 6 below) whilst they make any decisions on cover however, tread carefully and speak to the insurer first. If you respond to the claim before speaking to your insurer, they can refuse cover if they consider their position has been prejudiced. Explain the urgency to your insurer as responding to a claim is time critical (though most insurers will be familiar with this). Most insurers will have a panel of legal advisors. They should permit you to instruct your chosen solicitors unless there is a good reason not to, but they usually require you to pay any difference in fees between their panel rates and those of your chosen firm and may impose reporting obligations.
- Seek legal advice – If you are in receipt of a claim form, it is in your best interests to seek legal advice from a litigation professional.
- Has it been issued correctly? Has it been sealed with a stamp by the Court, does it include a claim number and has the correct court fee been paid?
- Has it been served correctly? Has it been sent to the correct person and address; does it meet the requirements of the Civil Procedure Rules?
- Jurisdiction challenges – Can the Court’s jurisdiction be reasonably challenged? Red flags might be that the contract says that proceedings should have been issued in a different country, or perhaps subject to arbitration or some other alternative dispute resolution process.
- Acknowledgement of service – If there are no issues such as those raised by points 2-5 above, an acknowledgment of service needs to be filed with the Court within 14 days of the deemed date of service of the claim form on you (and should also be sent to the claimant). A blank acknowledgment of service should have been served with the claim form as part of a “response pack” which includes sections in which the defendant can either admit, indicate an intention to defend or acknowledge the claim against them. A deemed date of service may be written on the claim form, from which the 14 day deadline should be calculated, otherwise the deemed date of service may need to be calculated in accordance with the Civil Procedure Rules. The deemed date varies depending upon how proceedings were issued and how you have been served. Filing the acknowledgment of service on or prior to the 14 day deadline will avoid default judgment being entered against you and allows you a further 14 days in which to file (with the Court) and serve (on the claimant) a defence.
- Prepare defence or counterclaim – Instruct your solicitors to draft and file a defence, typically within 28 days of the deemed date of service (i.e. 14 days to acknowledge service and, if you acknowledge service, a total of 28 days from service to file a defence). A 28 day extension to file a defence can be agreed by the parties. If applicable, also consider whether you have a counterclaim against the claimant.
- Strike-out Application – Consider whether you may have grounds for striking out part or all of the claim. Is the claim legally defective or does it have no reasonable prospect of success?
- Can a resolution be agreed? Consider routes for resolving the dispute. Can you reach out to the other side (whilst still complying with the above deadlines) to see if a settlement is possible? It is not weak to approach another party to discuss resolution if you do so on a “without prejudice” basis – it is pragmatic, and the court encourages it.
Putting yourself in the best position
To maximise your time to take advice and prepare a defence, it is crucial to have robust systems in place to ensure claim forms are picked up and dealt with swiftly when received (rather than passed around an internal post system until a deadline is missed). This includes training staff to identify and escalate legal documents promptly to the relevant personnel within an organisation as soon as they are received, particularly for litigation, insolvency or anticipated litigation cases.
To ensure you do not inadvertently have a judgment entered against you, ensure your staff can recognise claim forms as they may be received by post, email or fax.
Act fast, seek advice
Timeframes for responding to a claim form are strict, with default judgment being a likely outcome if missed. Whilst it is possible to explore whether a default judgment can be set aside, there are legal hurdles to overcome, and it is ultimately a matter of the court exercising its discretion. Tactically, this also means starting on the back foot. It is crucial to act fast and seek advice from a legal professional as soon as possible on receipt of a claim form, so that you can evaluate your position and formulate a robust response strategy. Early action is critical to safeguarding your legal rights.
Please contact Hannah Tucker (Paralegal), Nick Roberts (Senior Associate) or any of our Commercial and Regulatory Disputes team if you receive a claim form or need advice on any dispute.
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